The euro zone's initial composite PMI for August, released by IHS Markit, hit 59.5, compared with a previous value of 60.2 and is expected to be 59.6. Although a reading above 50 represents an expansion of economic activity, the August figure was the lowest in two months. Euro area AugustMarkitThe initial PMI for the manufacturing sector was 61.5, the lowest since February, after a previous reading of 62.8 and a forecast of 62. Euro area AugustMarkitThe initial value of PMI of service industry is 59.7, the previous value is 59.8, and the expected value is 59.5.

Preliminary data show that the eurozone economy lost some momentum in August, but is still expected to grow strongly in the third quarter of this year. Among them, as widespread supply bottlenecks hinder the development of factories, the economic recovery of the euro zone's two largest economies is becoming increasingly dependent on services.

In Germany, service sector activity was close to a record high in July, while manufacturing growth slowed more than expected in the IHS Markit's monthly business survey. The French service sector was also stable in August, thanks to a pick-up in the hotel industry. Second, tourism-dependent economies such as Italy and Spain have become drivers of European growth in the second quarter. But the spread of Delta variants now adds to the uncertainty about the future.

In manufacturing, input shortages and transport gridlock have proved difficult to overcome in the short term. A survey of German companies last week showed that most companies do not expect things to improve this year. Phil Smith, deputy director of IHS Markit, said German services "have become the main driver of growth, with another excellent performance following the record expansion in July". "many manufacturers are still affected by shortages of raw materials and components and supply delays."

Last month's growth estimates show that the euro zone has rebounded from a technical recession (defined as two consecutive quarters of contraction), growing by 2% in the second quarter of this year. The release of the data is important because the ECB will meet next month and some member states are pushing for negotiations to reduce some of the stimulus measures being implemented.

Germany

Germany in AugustMarkitThe initial value of comprehensive PMI was 60.6,62.4 before, and expected to be 62. Germany in AugustMarkitThe initial value of manufacturing PMI is 62.7, the previous value is 65.9, and the expected value is 65. Germany in AugustMarkitThe initial value of PMI in the service industry is 61.5, the previous value is 61.8, and the expected value is 61.

"although economic growth has slowed since July, the data still show that economic expansion in the third quarter is stronger than the 1.5 per cent temporary GDP growth in the second quarter," Phil Smith said in a statement.

However, he added, "many manufacturers are still constrained by shortages of raw materials and components and supply delays, which are likely to remain constraints in the coming months."

France

French companies also failed to escape the impact of slowing growth in August. France in AugustMarkitThe composite PMI initial value of 55.9, the previous value of 56.6, is expected to be 56.1; it is a four-month low, but the data still show solid economic growth in the third quarter of this year. France in AugustMarkitThe initial value of manufacturing PMI is 57.3, the previous value is 58, and the expected value is 57.2. France in AugustMarkitThe initial PMI of the service industry is 56.4. the previous value is 56.8, and the expected value is 56.3.

"although companies face some supply-side challenges, the PMI data have always shown signs of strong expansion, which is encouraging," Joe Hayes, senior economist at IHS Markit, said in a statement.

He added: "given that the third quarter is more than halfway through, the survey data so far suggest that we may see another good result from the corresponding GDP data."